Correlation Between Blue Line and Assa Abloy
Can any of the company-specific risk be diversified away by investing in both Blue Line and Assa Abloy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Blue Line and Assa Abloy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Line Protection and Assa Abloy AB, you can compare the effects of market volatilities on Blue Line and Assa Abloy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Blue Line with a short position of Assa Abloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Line and Assa Abloy.
Diversification Opportunities for Blue Line and Assa Abloy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Blue and Assa is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blue Line Protection and Assa Abloy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assa Abloy AB and Blue Line is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Blue Line Protection are associated (or correlated) with Assa Abloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assa Abloy AB has no effect on the direction of Blue Line i.e., Blue Line and Assa Abloy go up and down completely randomly.
Pair Corralation between Blue Line and Assa Abloy
Given the investment horizon of 90 days Blue Line Protection is expected to under-perform the Assa Abloy. In addition to that, Blue Line is 8.87 times more volatile than Assa Abloy AB. It trades about -0.04 of its total potential returns per unit of risk. Assa Abloy AB is currently generating about -0.04 per unit of volatility. If you would invest 1,558 in Assa Abloy AB on September 4, 2024 and sell it today you would lose (22.00) from holding Assa Abloy AB or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Blue Line Protection vs. Assa Abloy AB
Performance |
| Timeline |
| Blue Line Protection |
| Assa Abloy AB |
Blue Line and Assa Abloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Line and Assa Abloy
The main advantage of trading using opposite Blue Line and Assa Abloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Line position performs unexpectedly, Assa Abloy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Assa Abloy will offset losses from the drop in Assa Abloy's long position.| Blue Line vs. BIO Key International | Blue Line vs. LogicMark | Blue Line vs. Knightscope | Blue Line vs. Guardforce AI Co |
| Assa Abloy vs. Atlas Copco AB | Assa Abloy vs. Carlsberg AS | Assa Abloy vs. DSV Panalpina AS | Assa Abloy vs. Alfa Laval AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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